If you’re considering taking a business loan now or in the future, it’s useful to be aware of some roadblocks that could prevent you from being approved.
Poor Credit History
You’re more likely to be able to get a business loan if you have a good credit file because lenders are likely to look at your credit report when making a decision. If your report shows that you’ve got a history of missing payments, you might be declined for a business loan.
Limited Cash Flow
Your cash flow is the cash and cash equivalents that flow in and out of your business. It’s often one of the first things the lender will look at when determining your business’ financial health and how affordable the loan will be for you. Positive cash flow is indicative of a business’s ability to meet debts and pay expenses. However, there are business finance options that are designed to help businesses experiencing a cash-flow gap.
Too Many Loan Applications
When applying for more than one loan at once, some business owners believe they will cover all their bases. In this way, they can select from a variety of loan offers. However, too many loan applications opened at once can raise a credit bureau’s red flag and make it difficult to get a loan.
Lack Of Strong Business Plan
Setting out a clear business plan and sticking to it can help you achieve financial stability, which, in turn, can make you less risky in the eyes of lenders. Many lenders will want to see your business plan when you apply for a loan and any assets you’re offering as security. Your business plan should include a summary of your business and details of its products and finances.
Disorganisation
Being disorganised can slow down the process of getting a business loan. You’ll be required to provide paperwork, and not having the right documentation could impact your ability to get finance. Try to get everything together in advance. The documentation you might need to provide could include your business plan, proof of security, bank statements and balance sheet.
Failure to explore the market
Securing a loan from a traditional lender can be challenging, but there are many alternative financing options available for businesses. Explore these opportunities and take your chance.
By Oyindamola Olawuyi With Agency Report
